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The U.S. International Trade Commission (USITC) today released a report cataloging information on the distributional effects of trade and trade policy on underrepresented and underserved communities.

The investigation, Distributional Effects of Trade and Trade Policy on U.S. Workers (Inv. No. 332-587), was requested by the U.S. Trade Representative in a letter received on October 14, 2021.

As requested, the USITC, an independent nonpartisan factfinding federal agency, gathered information through roundtable discussions among representatives of underrepresented or underserved communities, a symposium focused on academic and similar research on the distributional effects of trade and trade policy, and a review of economic literature on this topic. The Commission also accepted written submissions and conducted a public hearing in connection with the investigation.

The information in this report includes, but is not limited to:

-- a summary of seven roundtable discussions in which participants discussed their perspectives and experiences of the impact of trade, trade policy, and other events on underserved and underrepresented communities;
-- a catalogue of information collected through written submissions and a public hearing held to supplement the roundtables;
-- a critical review and detailed assessment of academic and policy research examining the distributional effects of trade, which identifies gaps in the data and literature, and indicates where improvements to the coverage of and access to datasets could improve analysis of the distributional effects on underrepresented or underserved communities; and
-- an overview of a two-day academic symposium where participants discussed the methodologies and data gaps involved in researching distributional trade effects, as well as relevant research underway on these effects globally.

Roundtable participants suggested several ways to address the challenges workers face in underserved and underrepresented communities, such as government funding for training and community programs, expansion of the Trade Adjustment Assistance (TAA) program, on-the-job training and apprenticeship programs, and additional investment. In addition, many participants said that U.S. trade policy needs to move toward a framework that better protects U.S. workers and strengthens domestic supply chains. Participants suggested that governments should include workers and affected communities in policy- and decision-making processes. Also, participants recommended collecting more detailed data to better understand effective policy interventions.

Existing research on distributional effects descriptive and modelof trade generally employs two broad types of methodologies based. Descriptive methods use data to identify trends and other relationships between explanatory and outcome variables such as job losses. Modelbased methodologies use st : atistical or mathematical methods to isolate and quantify relationships between explanatory variables and economic outcomes while accounting or controlling for other variables that may also be influencing outcomes.  
A robust literature on the distributional effects of trade on U.S. worker outcomes has emerged, but several gaps remain. Data gaps are covered in detail in the literature review and the academic symposium chapter and are also discussed in the roundtable chapter. The current literature largely focuses on the trade effects of goods imports, covers only a limited number of demographics and communities, includes little research on distributional effects of services trade, and focuses on wages rather than also examining effects on wealth. In addition, researchers’ ability to conduct distributional effects analysis would be improved if adequate longitudinal and employer-employee matched data were available.   
Some of these gaps in the literature are fueled by gaps in data. The lack of available data on the production and trade of services has largely prevented researchers from conducting analyses on the impacts of services trade similar to those performed for merchandise trade. The lack of research on the impact of trade on long-term wealth outcomes is due in part to limited data on individual wealth as well as difficulties in accessing data sources that track individuals’ cumulative income through time. Data sources that contain longitudinal worker-level data sufficient for long-term income and wealth analyses commonly have prohibitive restrictions in place to ensure individuals’ anonymity. Filling these services and wealth data gaps could permit researchers to investigate the effect of trade shocks on understudied communities, shed more light on how trade shocks affect workers employed in the services sector, and identify how workers of similar wages and different wealth classes respond to trade shocks. In addition, longitudinal data that links employees and employers could permit simultaneous analysis of supply- and demand-side factors, respectively, related to wages and employment.

A few mutually reinforcing avenues may be possible for mitigating the data gaps affecting distributional effects research. These avenues include oversampling small demographic groups to facilitate intersectional analysis or analysis of smaller demographic subgroups, broadening the scope of survey questions to include information on understudied groups, and increasing the granularity of industry and geographic variables to permit detailed analysis of how trade is affecting specific industries and location types.  

A powerful avenue for expanding distributional effects literature would be to make restricted-use data more easily accessible to researchers conducting distributional effects research. This restricted-use data is only available to select researchers who are granted conditional access by the data provider.

Researchers with access to restricted-use employer-employee matched longitudinal data can exploit rich firm- and worker-level variables over a long time horizon. Because workers experience trade shocks when changes in the volume of imports or exports affect demand for labor at the firms, the ability to simultaneously analyze firm-level and worker-level effects is key to analyzing these worker-level effects and identifying the mechanisms by which these trade impacts are distributed across different workers. Researchers with access to restricted-use data can expand the analysis on the persistence of trade shocks and how different worker subgroups adjust to job transitions following trade shocks. In addition, because identifying wage impacts as workers transition requires a sufficient number of data points to pinpoint changes in earnings after a trade shock, the longer time horizon available in restricted-use longitudinal data is integral for quantification of demographic-specific wage impacts.

As requested, the Commission held a symposium focusing on academic or similar research on the distributional effects of trade and trade policy on underrepresented and underserved communities. The Commission extended invitations both to researchers conducting distributional effects research and to government agencies providing data used in distributional effects research. In addition, the Commission solicited presentations from persons conducting distributional effects research through a notice published in the Federal Register. The academic symposium, convened on April 5–6, 2022, consisted of eight sessions that focused on objectives outlined in the request letter. The symposium included 48 speakers, presenters, and moderators; between 85 and 112 individuals attended each session. Several of the authors whose work is discussed in this report’s literature review also chose to present their work at the academic symposium. As such, the symposium provided a forum for authors to detail nuances in their published analysis, put their work in conversation with other literature on the topic, and provide an aerial view of how their work furthers the investigation of the distributional effects of trade and trade policy.

The academic symposium’s keynote speaker was Dr. David Autor, who presented an overview of findings from his work with co-authors on the local labor market effects of the sudden increase in imports from China during the 1990s and 2000s (commonly referred to as the “China shock”). This China shock research informed the methodological approach used in much of the work presented at the symposium as well as the discussion of distributional effects of trade on U.S. workers throughout the event.

• Session A—Distributional effects of trade and trade policy on U.S. workers by education and skill level
• Session B—Distributional effects of trade and trade policy on workers by race and ethnicity
• Session C—Distributional effects of trade and trade policy on gender
• Session D—Existing methodologies and their limitations, and new labor modeling work
• Session E—Value of access to restricted-use data for distributional effects analysis
• Session F—Government datasets for analyzing the distributional effects of trade among different subgroups
• Session G—The global research agenda on distributional effects of trade
• Session H—Moderated discussion on future directions for distributional effects research

Report: https://www.usitc.gov/publications/332/pub5374.pdf
Press release: https://www.usitc.gov/press_room/news_release/2022/er1114ll2015.htm

Statement from Ambassador Katherine Tai Following the Release of the USITC Report on the Distributional Effects of Trade and Trade Policy: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/november/statement-ambassador-katherine-tai-following-release-usitc-report-distributional-effects-trade-and

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A government trade agency report suggested that the impact of trade policy differed for workers depending on their race and socioeconomic status.

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